posted at 11:46 am on August 1, 2012 by Ed Morrissey

Time to start breaking out the predictive indicators for Friday’s jobs report on employment in June! First up, as always, comes from private-sector payroll giant ADP, which uses its own customer base to estimate job growth in non-government positions. Today’s report predicts an increase of 163,000 private-sector jobs in July:

Employment in the U.S. nonfarm private business sector increased by 163,000 from June to July, on a seasonally adjusted basis. The estimated gain from May to June was revised down slightly, from the initial estimate of 176,000 to 172,000.

Employment in the private, service-providing sector expanded 148,000 in July after rising a revised 151,000 in June. The private, goods-producing sector added 15,000 jobs in July. Manufacturing employment rose 6,000 this month, following a revised increase of 9,000 in June. Employment on large payrolls—those with 500 or more workers—increased 23,000 and employment on medium payrolls—those with 50 to 499 workers—rose 67,000 in July.

Employment on small payrolls—those with up to 49 workers—rose 73,000 that same period. Of the 67,000 jobs created on medium-sized payrolls, 4,000 jobs were created by the goodsproducing sector and 63,000 jobs were created by the service-providing sector.

That sounds like good news on the surface, but this series almost always overstates the BLS figures — usually by a considerable margin. For instance, the 176K predicted by ADP for June turned into just 80K for the official BLS numbers. May’s ADP increase of 129K ended up as 69K from the BLS. Using ADP to figure out actual numbers for the BLS is a bit of a fool’s errand.

However, the ADP series usually tracks well as a trend indicator. The trend downward signals that July’s numbers aren’t going to be much better than June’s, and might be slightly worse. Unfortunately, a combined article at CNBC from AP and Reuters stories treats the ADP report as a numeric indicator rather than a trend indicator, at least in its lead:

A private survey shows U.S. businesses kept hiring at a modest pace in July, suggesting the job market could be improving after three sluggish months.

Payroll provider ADP said Wednesday that businesses added 163,000 jobs last month. That’s slightly below a revised total of 172,000 jobs it reported for June.

The report only covers hiring in the private sector and excludes government job growth. The Labor Department will offer a more complete picture of July hiring on Friday.

The ADP survey offered some hope that hiring is picking up. But it has often deviated sharply from the government report. In June, the Labor Department said employers added just 80,000 jobs, less than half the figure reported by ADP.

CNBC reports that analysts expect a modest improvement from June to 100,000 jobs added in Friday’s report. Based on the track record of ADP and the trend from May to June and June to July, I’d guess that 75K is a better estimate of job growth. Neither would be enough to actually add jobs in relation to population growth, which requires between 125K-150K jobs added each month.

Manufacturing in the U.S. unexpectedly contracted for a second month in July, indicating a mainstay of the economy was struggling to improve.

The Institute for Supply Management‘s factory index was little changed at 49.8 last month from 49.7 in June. Fifty marks the dividing line between expansion and contraction. Economists surveyed by Bloomberg News projected a reading of 50.2, according to the median estimate.

Cutbacks in household purchases, unemployment exceeding 8 percent, Europe’s debt crisis and slower global growth threaten to further restrain an industry that’s been a source of strength for the economy. Factories may also temper production as companies curb spending out of concern that lawmakers will fail to prevent automatic government spending cuts and higher taxes from going into effect next year.

Estimates in the Bloomberg survey of 84 economists ranged from 48.5 to 52 for the Tempe, Arizona-based ISM’s factory report.

Blowback

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No point in going to work or starting a business since no one ever actually builds anything. Someone else does. So if we never accomplish anything why not just stay home and collect a government check?

The ADP number was actually better than expected (consensus was for +120K), but this number has not been an accurate predictor of the BLS number (due Friday) anyway. The ISM number was below 50 again, but only slightly less than expectation (49.8 act. vs 50.1 exp.) so no big deal, especially considering the contraction we’re seeing in Europe PMIs now. Markets taking it all in stride, waiting on the Central Banks later today …

C’mon, there must have been an earthquake or a tsunami somewhere we can blame tis on. How about it rained really hard on Saturday? Oh no…wait…I got it, it’s the Olympics, everybody’s been watching the Olympics so the jobs numbers are flaky. yeah, that’s the ticket.

“Yes, we have 41 straight months of unemployment over 8.0%, but this is entirely expected. Well, actually it is not expected because the Administration promised us 1.3 Trillion dollars in stimulus would result in never having unemployment over 8.0%…

Be that as it may, this month’s report was entirely expected. Well, actually the median expectation was for 50.2%, but that is close enough. The most important thing to watch out for is next month’s report, or next week’s report. And this is crucially important because it is what I have been typing on here for the last six months.

So, just remember, we are watching and waiting. Actually, no we aren’t. We are running around Chicago Headquarters trying to figure out how to propagandize all of the awful economic data the last six months. But do not worry, just wait until the Fed acts. We are advising our clients.. COUGH…bloggers.. COUGH that all will be well. Maintain faith in your overlord, everything will be fine!

If a bunch of people polled last month thought 69,000 jobs created in June was good news, they’ll be ecstatic if July sees an additional 75,000 added.

Doughboy on August 1, 2012 at 11:57 AM

Sadly, that is exactly the view liberals have. When Obama came into office, we were losing 750,000 jobs a month! Any new jobs means whatever Obama is doing is working! When asked why they think this is good news when it doesn’t even keep up with population growth, they say Obama is doing the best he can, and would be doing better if it weren’t for those obstructionist republicans! You really can’t fix stupid.

they say Obama is doing the best he can, and would be doing better if it weren’t for those obstructionist republicans!

Night Owl on August 1, 2012 at 12:17 PM

I’ve heard that stupidity and I respond the only way I know how. I agree with them. That, yes, Obama is doing the best he can and that is why he needs to be replaced with someone who is competent and a real leader willing to make the hard decsions.

For gods sake, can we please get a law passed that makes it a capitol crime for anyone in the Fifth Column Treasonous Media to used the word “Unexpectedly” in any reference or context associated with the economy?

…inthemiddle is lurking…and will be here to comment in 5…4…3…2…
….UpperYeasty meanwhile…is busy shaving Virginia!
…for some reason they don’t like these type of threads!

KOOLAID2 on August 1, 2012 at 12:27 PM

The trolls know they won’t be changing any of our minds, especially because they’re inept with their own presentations. So, what could otherwise be their motivation except to harass and annoy, be contrary?

They can’t work at their mission with threads like this. But soon as someone mentions Palin, they’ll invade in droves to deflect the topic and try dominating the conversation.

I ask the same question every time I see one of these “unexpectedly” headlines: WHEN were the numbers unexpected?

The REPORT may have been issued today, but all the numbers have been coming in steadily for the past month. And even then the day-by-day figures aren’t random; they’re a continuum, that anyone should be able to easily see trending as they go. And anyone who calls himself an “expert” should have seen the immediate precursors to layoffs some time before that. And in the case of quarterly reports, we’re talking about people who are constantly “surprised” by things that have been happening for MONTHS before the report comes out.

So, again I ask, WHEN were these perennially erroneous prognostications actually MADE? Do NBC, AP, Reuters, et al publish these things somewhere. Like old weather reports, can we go back and look them up to see what their real-world accuracy ratings were? Or is all that back in the sausage shop; carefully hidden from public view by the people who claim it’s their God-given duty to inform the public?

I don’t think are any such track records anywhere, even squirreled away in a newsroom’s safety deposit box somewhere.

Such discreteand incremental predictions were never even MADE by the media sources, let alone recorded. This isn’t a long string of miscalculations — it’s a constant state of disbelief.

In the media’s mind, Barack Hussein Obama is their God. They don’t have a bunch of predictions; they have a single template. And it was set in solid stone three years ago. All about how the oceans would recede, the enviornment would cool, the Middle East would become peaceful and – somehow, magically – Socialism would actually WORK for the first time ever in the history of the human race.

Inside their own minds, liberals don’t believe they’re “lying” about any of this. It simply, honest-to-God never occurs to them that Barack Hussein Obama might be wrong. As far as they’re concerned, it’s the WORLD that’s off-kilter whenever what you and I refer to as “reality” fails to match what Obama told them it’s supposed to be. They literally can’t imagine why we see it the other way around.

simple solution….just remove a couple million more folks from the rolls since they gave up trying to find a job and POOF! you have Unemployment at 7.7% just in time for the election!

DA CHICAGA WAY!

SDarchitect on August 1, 2012 at 12:06 PM

Why do you think he issued an illegal Executive Order dropping the work requirement from welfare recipients? When required to look for work to receive welfare, recipients count against unemployment. When not required to look for work, they’re dropped from the calculation.

I know where there will be a need for employees — Chic-Filet! I sent my son there to pick up some chicken and he said that there was a huge traffic jam and went back several blocks — everyone getting in line for the drive through at Chic-Filet here in Overland Park, KS.

Gallup’s U.S. Job Creation Index slipped to +17 in July, after registering at or near +20 from April through June. Despite the drop, the +17 continues to be one of the more positive net hiring values Gallup has recorded since 2009, though it still trails the readings seen as the 2008-2009 recession was just starting.

The hiring component of the index fell slightly to 34% in July, from 36% in June, while the firing component moved to 17%, from 16%. This backslide in hiring mirrors Americans’ flagging economic confidence in July.

Gallup’s Job Creation Index averaged +22 in July among non-government U.S. workers, down slightly from +24 in June. Among government workers, the index averaged -5 in July, similar to -4 in June.